Showcasing green ideas: G.D. Gautama, Principal Secretary, SME, West Bengal, speaks as S. Raghupathy of CII-Godrej GBC, Sudhir Trehan of Crompton Greaves, S. Padmanabhan of USAID and Luiz Ros of WRI look on

NOVEMBER 2-3, 2006
Taj Lands End, Mumbai

You could say that I had been waiting for this event for four months now. Ever since New Ventures India-a three-way partnership between CII, the Washington, D.C.-based World Resources Institute (WRI), and USAID-closed a 'green' business plan competition end of July this year and announced that the winning entries would be showcased to potential investors in Mumbai, I had been curious to know what sort of green business ideas would bubble forth from India's small and medium enterprises. Today, on a muggy November morning, I was face to face with the 10 winning entries from the 60 that CII's Green Business Centre in Hyderabad received in response to its call for business plans. But before I introduce you to the entrepreneurs and their ideas, a quick word about the World Resources Institute. In 1999, this environmental think-tank set up New Ventures Global to encourage growth of environmentally-friendly business in developing countries. Over the last seven years, it has helped New Ventures entrepreneurs raise $12 million (Rs 54 crore) in investment. One could argue that $12 million is not a whole lot of money. But look at this way: Without New Ventures, even this money would have been hard to come by for these green entrepreneurs.

Entrepreneurs like Narayana Peesapaty, for instance. Executive director of Hyderabad-based BK Environmental Innovations, Peesapaty's business plan is rather unique. He wants to launch edible cutlery-forks, spoons, plates, bowls, chopsticks, and even knives that can be eaten (and, of course, digested) instead of being reused or discarded. "Nearly 50 billion pieces of plastic cutlery like disposable spoons and forks are sold every year in India," notes Peesapaty. The problem with plastic is that it is not naturally degradable. Therefore, he expects some environmentally-sensitive countries to be his first customers. "Even though edible (made with flour and other natural ingredients) and marginally costlier than plastic cutlery or wooden chopsticks, edible cutlery will find takers in countries such as Japan, where the people are environmentally conscious and aware that plastic use is carcinogenic," says Peesapaty. A pack of 50 edible spoons will be priced at Rs 60. Peesapaty hopes to roll out 150,000 pieces of edible cutlery a day. To bring his idea to fruition, he is seeking an investment of about Rs 1.50 crore.

Even though the edible cutlery proposal made it to the final 10 proposals, it was not among the final three winners. Nevertheless, Peesapaty's idea was a hit with the audience, which liked the idea of making the world a better place, one bite at a time. Naturaflex, Sumaya HMX Systems and ABT Bioproducts were the three companies that made it to the top of the list. A cursory examination of their proposals left me in no doubt that there is no paucity of feasible ideas in eco-friendly businesses in India. Bangalore-based Sumaya markets a product called the Ambiator-an energy-efficient and eco-friendly alternative to conventional air-conditioners. "Basically, an Ambiator cools air to levels comparable to those of air-conditioners without emitting chlorofluorocarbons (cfcs) as it does not have a compressor," explains A. Vaidyanathan, Sumaya's Managing Director. "In addition, the Ambiator consumes only 35 per cent of the power that traditional air-conditioners guzzle."

Is the idea marketable? Apparently, yes. Sumaya has grown at 85 per cent CAGR over five years and has a business worth Rs 4 crore with customers such as Wipro, MICO, ABB, and Polaris. It has plans of growing revenues to Rs 140 crore in five years. To fund its growth, Sumaya is on the lookout for equity investment of $1 million (Rs 4.50 crore).

A winning idea: G.D. Gautama (third from left) felicitating Abhay Shendye, Partner, ABT Bioproducts

Another Bangalore-based company, Naturaflex has manufacturing facilities in Hosur, Tamil Nadu, and manufactures biowood (made from coir) that can be used for making anything from wardrobes to mattresses. ABT, on the other hand, has developed products that will help farmers improve their productivity per acre, and shift from chemical to organic farming without significant expenditures.

With ideas like these, what's stopping these companies from making a mark? It's the mindset of the traditional investor. Like Vaidyanathan says, "The environment in India for SMEs is not at all friendly. Raising institutional funding for companies that are between the size of Rs 2-5 crore is not at all easy." He adds that SMEs not belonging to the IT or BT sector and belonging to the old economy find it tough to raise money. "The market perception that any innovative technology has to be from the West does not help either," he complains. He has a point. While there were quite a few investors including YES Bank, ICE Ventures, and Pinstorm's Mahesh Murthy, there were no VC big guns. Yet, I walked away from the event, I could not help but feel that things were about to change.